Part 14

Income tax liability: miscellaneous rules
Chapter A1

Remittance basis

Remittance of income and gains: transfers from mixed funds

Breaches of the deposit rule
809RC
1
There is a breach of the deposit rule if a prohibited sum is paid into the account on or after the qualifying date.
2
A breach of the deposit rule is remedied if, within 30 days beginning with the day on which the individual became or ought reasonably to have become aware of the payment of the prohibited sum, the required amount is transferred out of the account by way of a single one-off transfer.
3
“The required amount” is an amount equal to—
a
the prohibited sum, plus
b
all the other prohibited sums (if any) that have been paid into the account since that sum was paid in.
4
If there are 3 breaches of the deposit rule in any 12 month period, subsection (2) does not apply to the third breach and, accordingly, the third breach cannot be remedied.
5
The payment of a prohibited sum (“the later prohibited sum”) into the account does not result in a breach of the deposit rule if—
a
a breach resulting from an earlier payment of a prohibited sum into the account is remedied, and
b
the later prohibited sum is represented by the required amount in relation to that breach.
6
A “prohibited sum” is anything other than a sum that is, or derives wholly (whether directly or indirectly) from, any of the following kinds of income or capital—
a
general earnings of the individual from an employment for a tax year which is a relevant tax year in relation to the employment,
b
general earnings of the individual from an employment which consist of money and are paid in a tax year which is a relevant tax year in relation to the employment,
c
an amount of specific employment income which, by virtue of Part 6, 7 or 7A of
ITEPA
2003 or any other enactment, counts as employment income of the individual in respect of an employment for a tax year which is a relevant tax year in relation to the employment,
d
interest on the account, or
e
consideration for the disposal of employment-related securities or employment-related securities options in the circumstances described in subsection (7).
7
The circumstances are—
a
the securities or options were acquired pursuant to a right or opportunity available by reason of an employment of the individual,
b
the disposal is or occurs in conjunction with, or as soon as reasonably practicable after, a relevant event involving those securities or options, and
c
the tax year in which the relevant event occurs is a relevant tax year in relation to the employment.
8
For the purposes of subsection (7) each of the following is a “relevant event”—
a
the acquisition mentioned in subsection (7)(a), and
b
any event on the occurrence of which an amount (if positive) counts as employment income by virtue of Part 7 of
ITEPA
2003 or would do so but for—
i
section 421E or 474 of that Act (exclusions: residence
etc
), or
ii
an election under section 430 or 431 of that Act.
9
For the purposes of this section a tax year is a “relevant” tax year in relation to an employment if—
a
the individual has general earnings from the employment for the tax year,
b
those earnings include both general earnings within section 15(1) of
ITEPA
2003 (“section 15(1) earnings”) and general earnings within section 26(1) of that Act (“section 26(1) earnings”),
c
at least some of the section 15(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 15(1) earnings, are paid into the account in the tax year, and
d
at least some of the section 26(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 26(1) earnings, are also paid into the account in the tax year.
10
For the purposes of this section—
a
“
employment-related securities
” has the meaning given in section 421B(8) of
ITEPA
2003, and
b
“
employment-related securities options
” has the meaning given in section 471(5) of that Act.
Pt. 14 Ch. A1 modified by 2003 c. 1, s. 41F(8) (as substituted (6.4.2015) by Finance Act 2014 (c. 26), Sch. 9 paras. 5, 47 (with Sch. 9 para. 48))
Ss. 809RA-809RD inserted (with effect in accordance with Sch. 6 para. 8 of the amending Act) by Finance Act 2013 (c. 29), Sch. 6 para. 6
Pt. 14 Ch. A1 modified by 2005 c. 5, s. 643F(4) (as inserted (with effect for the tax year 2018-19 and subsequent years) by Finance Act 2018 (c. 3), Sch. 10 paras. 11, 21(1) (with Sch. 11 para. 22))
Pt. 14 Ch. A1 modified (with effect in accordance with art. 1(2)(3) Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 19(3)
Pt. 14 Ch. A1 inserted (21.7.2008 with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 1 (with Sch. 7 paras. 85-89)
Pt. 14 Ch. A1 modified by 2005 c. 5, s. 643N(3)(4) (as inserted (with effect for the tax year 2018-19 and subsequent years) by Finance Act 2018 (c. 3), Sch. 10 paras. 11, 21(1) (with Sch. 11 para. 22))
Pt. 14 Ch. A1 modified (temp.) (for the tax years 2025-26, 2026-27 and 2027-28) by Finance Act 2025 (c. 8), Sch. 10 para. 18(1)(2)
Ss. 809L-809Z6 applied by 2005 c. 5, s. 643I(9) (as inserted (with effect for the tax year 2018-19 and subsequent years) by Finance Act 2018 (c. 3), Sch. 10 paras. 11, 21(1) (with Sch. 11 para. 22))
Ss. 809L-809Z6 applied by 2005 c. 5, s. 643A(6) (as inserted (with effect for the tax year 2018-19 and subsequent years) by Finance Act 2018 (c. 3), Sch. 10 paras. 11, 21(1) (with Sch. 11 para. 22))
Pt. 14 Ch. A1 modified by 2003 c. 1, s. 41A(8) (as inserted (21.7.2008 with effect in accordance with Sch. 7 para. 80 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 22)
Pt. 14 Ch. A1 modified by 1988 c. 1, s. 762ZB(3) (as inserted (21.7.2008 with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 94)
Pt. 14 Ch. A1 modified by 1992 c. 12, s. 87B(3) (as inserted (21.7.2008 with effect in accordance with Sch. 7 para. 115 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 108 (with Sch. 7 paras. 116-119))